63 Pages Posted: 7 Jun 2005
Date Written: June 3, 2005
The issue of sovereign debt - its character and effect - is really part of the much larger battle between two fundamentally opposed visions of the nature and character of the nation-states in general, and debtor states in particular, and of the global system that maintains the market for such transactions. The dominant vision, firmly grounded in private law, posits that growth can occur only in a tightly integrated global economy founded on trade liberalization, privatization, and macrostability. When the state fails to pay its debts, it ought to be treated like any other failed corporate enterprise -- a stay on debt collection efforts, broad enforcement of absolute priority, creditor approval of the proposed reorganization plan, and well protected new interim financing pending restructuring. Opposing the dominant vision is an anti-corporatist approach grounded in public law and the subordination of economics and markets to political control in the furtherance of deliberate state public policy and planning. States fail because it is in the interest of dominant states to use sovereign debt as a means of perpetuating subordination and a hierarchy of power among states. When a state fails to pay its debts, the focus ought to be on the creditor, and the fairness of the debt in terms of the larger public policy concerns - development, and the maximization of living standards for all individuals through state planning. The paper first explores the normative foundations of each vision and its consequences for dealing with the borrowings of nation-states. For this purpose, the paper concentrates on two actors who most starkly highlight the opposing views. For the dominant vision, the focus is on Anne Krueger, the First Deputy Managing Director of the International Monetary Fund, and specifically on her proposal to create a bankruptcy model for sovereign state debt restructuring. For the opposing vision, the focus is on Fidel Castro Ruz, the President of the Republic of Cuba and specifically on his elaboration of a critique of the dominant vision of global economic development championed by the IMF. These actors nicely distill the positions subject to analysis in this paper. The implications of each for the shape and character of international regulation, and of the state as an actor in the context of the emerging global system of economic and political regulation, are then explored. In particular, the paper contextualizes the Castro vision within the developing positions of the United Nations Human Rights establishment in Geneva and the Roman Catholic Church on globalization and sovereign debt in opposition to the market driven system elaborated through the IMF and well illustrated by Krueger's proposal for state discipline through bankruptcy.
Keywords: Sovereign debt, IMF, Cuba, globalization, neo-liberalism, labor policy, immigration
JEL Classification: E11,E63,F01,F10,F15,H10,H63,J24,J40,K33,O11,P50
Suggested Citation: Suggested Citation
Backer, Larry Catá, Cuba and the Imf: Conflicts Over the Nature of the State and Sovereign Debt in the Emerging Global Economic System (June 3, 2005). Available at SSRN: https://ssrn.com/abstract=736923 or http://dx.doi.org/10.2139/ssrn.736923